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Searching for feedback, trying to get the other side of the story, all at the end of another needlessly frustrating day…
I’ve recently seen a lot of projects in open tenders go to contractors who have low-balled the bid (hoping to make up the difference on extras), or who have made an unfortunate mistake, or who simply don’t know how to price the work properly and/or to make a thorough accounting of all aspects of the work that is involved.
The middle case can usually be addressed with a cautionary phonecall to make sure none of the less obvious but significant costs have been covered. If not, the chance to back out is extended- moral obligations aside, experience has shown that it is better for all to have a contractor who is making a living than one who is losing his/her shirt. Of course, we always try to avoid this occurence entirely before the tenders are received by making sure all items (obvious and less obvious) are spelled out, and uncertainties dismissed,in the contract documents. Clarity is everybody’s friend in this regard.
The first and last cases, however, seem to be more difficult to avoid or to address. The end result often seems to be that the competent bidder who has accounted for everything loses the bid. The winner, either having low-balled intentionally or through ignorance, spends the rest of the contract scrabbling around trying to collect money where possible and disputing every contractual obligation,no matter how small. Work is often done incorrectly and then misrepresented. Even when it comes to lifesafety issues such as fireseparation construction and structural details.
Life for the owner, the contract supervisor, the subs, and the low bidder’s own staff becomes miserable quickly. More time is expended on enforcing the contract than would be required to complete the job properly and on time.
And in all of this, the bidder who knows the job well and will run it properly goes hungry.
An obvious alternative is prequalified bidding, but what about those trying to make a name for themselves starting out?
It still sticks in my craw to see the fees expended on sorting out who should be allowed to run the job, and the time taken by potential bidders in submitting their qualifications- money that would all better off applied to the project in question. In effect, the owners and qualified bidders have to pay in time and/or money to exclude the incompetent ones.
Running ghost generals who are good but don’t meet prequalification under an established contractor (who then operates as a general in name only) can create a headache of paperwork and a nightmarish chain of communication in order to sort out complications, especially in jobs such as renovations of older buildings where decisions need to be made quickly.
I personally would prefer to work only with contractors whose work and skills I know are tried and true, and with whom I have a working and respectful rapport. I also can see, however, the dangers of such an exclusionary process. On many public jobs, such an approach simply isn’t possible given the inevitable accusations of collusion.
Disallowing low bids is exceptionally difficult to do if the low bidder wishes to kick up a fuss- despite what tender announcements and documents may say about ‘lowest bid or any bid not necessarily accepted.’ And in my experience it is always those fly-by-night companies that exert no effort in understanding, coordinating or running their jobs who will be the most likely to exert a considerable amount of effort in disputing any such dismissal.
I suppose I’m just tired of opening tenders and giving work to those who will do the worst work, who will require constant supervision, who will effectively require the threat of legal action to meet their contractual obligations, while the competent contractors that know their business and run their jobs in a clear and organized fashion go hungry.
What’s the view like from the other side?
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Replies
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Do I get credit for reading this book?
Ed.
*Well Ed, I skimmed it after the first cpl paragraphs. I think he likes us. But I'm not sure.
*Need me some TP
*Frugal, all of your points, including the intended philosphies, are, IMO, correct and right on the mark.Being an optomist however, your comments are heavy on one side of the bridge, that side verbalized under stress, duress and frustration - been there - and don't address the other side. That side tells of some of us with a list of clients waiting only for us to specifically serve them and at our prices, but that's already been addressed here several times in the past .
*Translation: There are some idiots who don't really know how to make a bid, or who make a mistake in making one, and we'll go easy on them. But what about the other two types of low bid....the guys who deliberately underbid, or the guys who don't know how to figure out what all they need to account for, to make a decent realistic bid, and thus the guys who can make a correct and fair bid always lose out?I think.
*the only solution i've ever seen is working off a qualified bid list for design and contract...and each project the purchasing entity trys to expand the list for better and cull it for the weak...but , it's a process... and it goes with the territory....this is why good executives get the big bucks ....
*It also goes to show how flawed the whole bid process/ philosophy is. I've always felt the bid process in the building business is fodder for fraud.If a builder is in it to produce a profit, (as he/she should be) then something has to go.How 'bout trying a different way, Frugal? A relationship first, a defined budget second and concern for ALL parties to come out on the possi-side.
*I find that the open tenders are fairly easy to bid. The plans and specifications are usually very complete, compared with the plans we get from a customer who wants a price from us alone.Yes, it is true that the bid can attract lowballers but sometimes not. We have gotten some very profitable jobs, particularly small restoration work where our skilled crew is much more efficient than a large contractor. Our biggest problem with open bids is being able to work them into our schedule. They usually have a firm deadline called for in the bid, not that you often see the project completed by that date anyway. We usually pass on those.We try not to worry about what others are bid. It is their problem if they underbid. There is another alternative outcome of a low bid. The low bidder just works cheap. We've done that and probably will again.
*In the light of the next morning things always seem better....Sorry for the rant.I see things changing increasingly towards prequalification as Mr. Smith suggests, but I have heard numerous complaints from contractors about the Catch 22 of "needing experience in the work of the bid, in order to get the work which would afford the necessary experience." I suppose, as you point out, it is the nature of the beast. Can't have your cake and eat it too.Further to Mr McDonell's comment, I wouldn't be surprised in the next decade to see the disappearance of the general contractor from all open public bids between 250k and 2-1/2m, to be replaced with project/construction managers running individual contracts with each sub. on behalf of the owner and in coordination with the consultant.Any thoughts on such arrangements? Must return to the grind stone.Thanks for the feedback. Best of luck to all.
*Project Management is a fact already with federal projects as I'm familiar with them. For instance, Cameron and Barkley, a pretty big multifaceted company, is handling a bunch of projects at NAS Jacksonville, from large scale new construction to the down and dirty repair and renovation scene. I'm quoting on a couple of them myself.It's a better scenerio for the contractor who then works for Cameron and Barkley, doesn't have to jump through all the hoops required for government contracts, has a central knowledgeable contact and gets paid ON TIME.